You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a qualified plan that first became effective in 2012. For more information, see
Credit for startup costs under
Reminders, earlier.

To qualify, the plan you set up must be in writing and must be communicated to your employees. The plan's provisions must be stated in the plan. It is not sufficient for the plan to merely refer to a requirement of the Internal Revenue
Code.

Most qualified plans follow a standard form of plan (a master or prototype plan) approved by the IRS. Master and prototype plans are plans made available by plan providers for adoption by employers (including self-employed individuals). Under a master plan, a single trust or custodial account is established, as part of the plan, for the joint use of all adopting employers. Under a prototype plan, a separate trust or custodial account is established for each
employer.

If you prefer, you can set up an individually designed plan to meet specific needs. Although advance IRS approval is not required, you can apply for approval by paying a fee and requesting a determination letter. You may need professional help for this. See Rev. Proc. 2013-6, 2013-1 I.R.B. 198, available at
www.irs.gov/irb/2013–01_IRB/ar11.html, as annually updated, that may help you decide whether to apply for
approval.

Internal Revenue Bulletins are available on the IRS website at IRS.gov They are also available at most IRS offices and at certain
libraries.

The fee mentioned earlier for requesting a determination letter does not apply to employers who have 100 or fewer employees who received at least $5,000 of compensation from the employer for the preceding year. At least one of them must be a non-highly compensated employee participating in the plan. The fee does not apply to requests made by the later of the following
dates.

The end of the 5th plan year the plan is in effect.

The end of any remedial amendment period for the plan that begins within the first 5 plan
years.

The request cannot be made by the sponsor of a prototype or similar plan the sponsor intends to market to participating
employers.

In setting up a qualified plan, you arrange how the plan's funds will be used to build its assets.

You can establish a trust or custodial account to invest the
funds.

You, the trust, or the custodial account can buy an annuity contract from an insurance company. Life insurance can be included only if it is incidental to the retirement
benefits.

You set up a trust by a legal instrument (written document). You may need professional help to do
this.

You can set up a custodial account with a bank, savings and loan association, credit union, or other person who can act as the plan
trustee.

You do not need a trust or custodial account, although you can have one, to invest the plan's funds in annuity contracts or face-amount certificates. If anyone other than a trustee holds them, however, the contracts or certificates must state they are not
transferable.